Conviction of Qwest's former CEO Nacchio overturned
— -- A U.S. appeals court on Monday overturned the inside-trading case of former Qwest CEO Joe Nacchio, ordering a new trial in front of a new judge.
Reached moments after the decision was released Monday, Herb Stern, Nacchio's lead lawyer, said he was "delighted" by the turn in the case. "It seems clear that we will have the opportunity to clear Mr. Nacchio's" name and reputation, Stern told USA TODAY.
Prosecutors spent years piecing together their case against Nacchio, ultimately accusing him of dumping millions of dollars' worth of Qwest shares because he believed the company was faltering, even as he continued to talk bullishly about its financial prospects.
Nacchio, Qwest's CEO from 1997 to 2002, has maintained his innocence. After he left, Qwest went into a financial free fall and had to restate $2.2 billion of revenue.
In overturning the case, the appeals court sharply criticized U.S. District Judge Edward Nottingham, who oversaw Nacchio's trial, for not permitting the introduction of expert testimony that his lawyers considered crucial.
Making matters worse for the prosecution, perhaps, the appeals court said Nottingham dealt with this issue in an abrupt, off-the-cuff manner. Such requests are supposed to be handled by the bench in a thoughtful, balanced way.
"The appeals court has concluded that the judge did not give this defendant a fair shake," said Steve Peikin, a partner in Sullivan & Cromwell and a former assistant U.S. attorney for the Southern District of New York.
To avoid this very outcome, Peikin said, savvy prosecutors often allow — rather than try to block — expert testimony. "Let it in and ridicule it," he says, referring to a popular tactic among prosecutors.
On a positive note for the prosecution, the appeals court concluded that there was sufficient evidence to convict Nacchio.
